Why is China's money supply M2 so high? Will it be inflationary

A, China's money supply M2 high reasons:

Because China holds a lot of foreign exchange, because the purchase of foreign exchange to balance the yuan exchange rate is the need for a large number of lending; due to the purchase of each time, the central bank will be used to offset the policy of the central bank, that is, through the open market to buy and sell the same amount of government bonds can be recovered most of the time, so the middle of it should not be. It also has a lot to do with the high savings of the Chinese, which is very much linked.

Two, will not be inflation:

China's money supply has been maintaining steady growth, which is basically synchronized with China's economic growth, and not very high, as for inflation, moderate inflation is normal, hyperinflation is impossible.

Extended information:

Money overissuance very much affects inflation to a certain extent, but the state for the formulation of economic policy, first of all, is to consider the maintenance of price stability, and therefore in a Within a certain period and range, the state is allowed to moderate inflation, so the same money supply moderate issuance can also stimulate the market liquidity.

But at present, the problem facing China and many other countries is not inflation, but the prevention of deflation! If you understand the economic principles, you know that deflation is more destructive to the market than inflation. Therefore, in the face of national macro-control under the adoption of monetary policy called: the lesser of two evils!

Baidu Encyclopedia-M2